Legislators and attorneys decry 'big insurance giveaways'

A couple of lawmakers and a group representing policyholders' attorneys slammed a slate of property insurance bills today that would allow hefty rate hikes and allow insurers to drop full sinkhole coverage.

They're "some of the most anti-consumer bills ever filed," Sen. Mike Fasano, R-New Port Richey, told reporters gathered for an event held by Policyholders of Florida, which represents policyholders' attorneys and consumer advocacy groups. Fasano said some mortgage lenders require sinkhole coverage so the bill could lead to an "economic disaster."

The Senate's budget committee approved one of the bills, SB 408, today by a 12 to 8 vote after approving two changes proposed by Fasano: removing a provision allowing insurers to withhold part of a claims payout before repairs are made and adding a provision requiring insurers to get approval from regulators before implementing rate hikes. The bill, a sweeping property insurance package, has cleared three committees and is expected to go to one more before a full Senate vote.

Before the vote, Sean Shaw, an attorney with Tampa-based Merlin Law Group, said in a statement that he organized Policyholders of Florida is "to remind legislators that we're watching, we're keeping score, and we will remember."

Shaw, who provided lukewarm support for legislation similar to SB 408 last year when he was the state's Insurance Consumer Advocate, said his group includes trial attorneys representing policyholders, groups representing public insurance adjusters, the Florida Consumer Action Network, the Florida Public Interest Research Group, Fair Insurance Rates in Monroe and others.

Those who support the bills say they're expected to help draw more insurers to Florida and strengthen the companies' ability to pay claims. They say too much regulation, and the state's emphasis a few years ago on lowering property insurance rates, has forced companies to scale back from the state.

"There are some special-interest groups who want to maintain the status quo with Florida's claims-rich environment that has resulted in two consecutive years of double-digit rate increases," the Florida Property & Casualty Association wrote in a statement, adding that insurers spent 55 percent more for non-catastrophic claims in Florida for the year ending in September of last year than any other state. "It is easy to vilify insurance companies, but the fact is insurance companies don't make claims. They pay them. If the current cost drivers i.e., rapidly increasing non-catastrophic sinkhole claims promoted by attorneys and public adjusters...remain, insurance rates will continue to rise."

Policyholders of Florida opposes:

SB 1714 and HB 1243, which would allow Citizens Property Insurance Corporation to raise policyholders' premiums by up to 25 percent a year, more than the 10 percent allowed by state law. It would also allow the insurer to drop policies for homes that cost at least $500,000 to replace and bar customers from hiring a public adjuster.

SB 1462 and HB 4115, which would repeal a state law requiring the Insurance Consumer Advocate to grade insurance companies on factors such as claims handling.

SB 1330 and HB 0885, which would allow insurers to increase policyholders' premiums by up to 30 percent a year without approval from regulators.

SB 1592 and HB 1187, which could hurt policyholders suing their insurer if they don't cooperate with the company's investigation of a claim.

SB 408 and HB 803, which would shorten the time policyholders have to file hurricane and sinkhole claims and allow insurers to drop full sinkhole coverage.

Gerald Wester, a lobbyist for the American Insurance Association, told the Budget committee today that the bill targets the "moral hazard" or incentive policyholders have to pocket claims payouts instead of making repairs. Insurance industry representatives say the say the rise in sinkhole claims is due in large part to people filing frivolous or fraudulent claims and it can indirectly drive up premiums for policyholders in the state that don't file sinkhole claims.

"They're trying to demonize sinkhole victims like myself. If fraud is truly the issue, go after the people committing fraud," New Port Richey resident Bill Skrynsky said at the Policyholders of Florida event.

Skrynsky, a client of the Merlin firm said repairs his insurer, State Farm, recommended and paid for did not work and the company is fighting making any more fixes. Meanwhile, he said doors and windows in his home don't close and rain leaks in. "It's very difficult to have a normal life...My home used to be a showplace, an elegant English Tudor in an equestrian neighborhood. Now it's a disaster," he said. "Legislators need to stop listening to big insurance companies...and start listening to real people."

Shaw declined to provide information on how much State Farm paid Skrynsky so far and how much coverage his policy included.

State Farm Spokesman Michael Grimes said Skrynsky's attorneys are attempting to try his case in the media and the insurer can't comment on specifics of the situation because a lawsuit is pending. "State Farm always follows relevant sinkhole statutes," he said.

Separately, the Office of Insurance Regulation will hold a hearing today on First Community Insurance's request for a 23 percent statewide average rate hike for its roughly 59,000 homeowners policies, including about 10,000 each in South Florida and the Orlando area.